GE Vernova Could Withstand a Slowing AI Spending Boom, Says J.P. Morgan — Barrons.com

What happened

J.P. Morgan said the artificial-intelligence infrastructure spending boom may be entering its later stages, risking slower equipment orders, excess manufacturing capacity, and pressure on profit margins. It expects robust data center-related sales growth in 2027 but slower order growth next year and a sharper revenue-growth slowdown in 2028; it sees GE Vernova as better positioned.

Confirmed

Global impact / market context

If data center spending slows, equipment suppliers could receive fewer orders while factories have more capacity than needed, pressuring sales and profit per sale. J.P. Morgan says GE Vernova’s backlog, service revenue, and limited direct data center exposure may reduce that risk to its earnings.

Analyst inference

The outlook is mixed: J.P. Morgan still forecasts data center-related sales growth of up to 60% in 2027 among covered companies, while expecting slower orders next year and weaker revenue growth in 2028. It lowered targets on several industrial stocks and rated three others Neutral.

Confirmed

What to watch

1. Track whether data center equipment orders slow as J.P. Morgan expects; weaker orders could leave suppliers with excess manufacturing capacity and increase pressure on profit per sale. Analyst inference
2. Watch whether GE Vernova’s backlog and recurring services revenue continue to support earnings if data center spending weakens; the article does not quantify their protection. Analyst inference
3. Compare future revenue growth with J.P. Morgan’s forecast of up to 60% data center-related sales growth in 2027, followed by a sharper slowdown in 2028. Analyst inference

Evidence

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